ASIC Raises Concerns Over Bitget’s Operations
The Australian Securities and Investments Commission (ASIC) has raised alarms regarding the operations of Bitget, a cryptocurrency exchange, due to its alleged promotion of high-risk futures trading products without the necessary licensing. In an official announcement released on Sunday, ASIC highlighted that both Bitget and its parent firm, BTG Technology Holdings Limited, are targeting Australian investors with cryptocurrency futures products lacking the required financial services authorization.
The regulator emphasized that Bitget does not possess an Australian Financial Services (AFS) license, effectively barring the company from marketing or soliciting investments from Australian consumers in this capacity.
Regulatory Scrutiny and Investor Protection
This warning from ASIC reflects a broader trend of heightened regulatory scrutiny, aimed at safeguarding retail investors from the dangers associated with unregulated and complex financial offerings in the cryptocurrency space. Last year, ASIC took a similar stance against Binance Australia Derivatives, revoking its license for misrepresenting retail clients, which stripped them of vital consumer protections, including mandatory product disclosures and avenues for dispute resolution.
Bridget Nichols, the chief commercial officer at crypto asset management firm Monochrome, noted the sluggishness of the Australian government in establishing clear regulatory guidelines. She remarked that until binding legislative changes are enacted, uncertainties persist in the industry.
Concerns Over High Leverage Trading
While ASIC limits licensed crypto derivatives leverage to a conservative 2:1 ratio to protect investors, Bitget reportedly offers leverage ratios as high as 125:1, which could lead to vastly increased potential gains or devastating losses. This disparity raises significant concerns for ASIC, which warns that trading such highly leveraged products could lead to substantial financial detriment.
The regulator cautions that investing in unregulated and unlicensed financial products significantly complicates recourse options if issues arise. Users of Bitget are not afforded the protections that a valid AFS license would ensure, including internal dispute resolution mechanisms and safeguards for client funds.
Balancing Innovation and Regulation
Nichols acknowledged the importance of investor protection while also voicing concerns that the current regulatory posture might stifle innovation in the fast-evolving digital assets sector. Nonetheless, she believes that aligning traditional financial regulations with digital assets is currently the most viable approach for establishing regulatory clarity in Australia. This perspective comes in light of Monochrome’s challenging three-year journey to launch a Bitcoin exchange-traded fund (ETF).
While Bitget maintains registration with AUSTRAC, Australia’s financial intelligence agency, to provide basic exchange services, it still lacks the broader AFS license necessary for offering derivatives trading. ASIC’s warning also aligns with a pattern of increasing oversight from international regulators, who have issued similar alerts or enacted regulatory measures against various Bitget operations in countries such as Spain, Austria, Germany, Canada, France, Cyprus, Malaysia, and Japan since 2022.
Decrypt has reached out to Bitget for their insights on this matter.
